4 in 10 SMEs have experienced cash flow problems in the last two years

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Nearly four in ten small and medium-sized enterprises (SMEs) have suffered cash flow problems since 2014, a new study has revealed.

According to Amicus Commercial Finance, 48 per cent of SMEs have experienced liquidity issues over the last two years.

This problem is particularly widespread among companies that employ between 50 and 250 staff, with 65 per cent of these organisations having cash flow problems.

The sheer scale of this issue has led to 71 per cent of SME owners classing cash flow problems as the biggest risk they must deal with.

John Wilde, managing director of Amicus Commercial Finance, commented: "Our research shows that most small firms recognise the damage caused by cash flow problems but that doesn’t guarantee their immunity. 

"The worst case scenario is insolvency but in our experience, slow paying invoices are often to blame."

Figures showed that cash flow issues have led to 41 per cent of SME owners struggling to pay suppliers.

Meanwhile, 30 per cent said the problem has made it difficult to keep up with debt repayments, and 29 per cent admitted it has made it hard to pay staff on time.

In addition, nearly one in five SMEs revealed that cash flow problems had led to them losing contracts.

Liquidity matters were found to be particularly common in the finance and accounting sector, with more than a third of SMEs in this industry saying they have cash flow difficulties.

On a regional basis, cash flow problems are most common in the north-east of England.